Key takeaways from MCA notifications dated 05.07.2018 and 07.05.2018

Key takeaways from MCA notifications dated 05.07.2018 and 07.05.2018

Collective summary of Amended Rules Companies Act, 2013 Notification date: 05.07.2018 MCA vide notification dated 05th July, 2018 has amended many rules of Companies Act, 2013 to support notified 75 sections of Companies Amendment Act, 2017. In this editorial author shall endeavor to briefly discuss such amended rules. A. The Companies (Acceptance of Deposits) Amendment Rules, 2018. These Rules shall come into force from 15th August, 2018 I. Rule 4- Form and Particular of advertisements or circulars Rule 4(1) after proviso following proviso shall be inserted. Provided further that a certificate of the statutory auditor of the company shall be attached in form DPT-1, stating that the company has not committed default in the repayment of deposits or in the payment of interest on such deposits accepted either before or after payment of interest on such deposits accepted either before or after the commencement of the Act and in case a company had committed a default in the repayment of deposits accepted either before or after the commencement of the Act or in the payment of interest on such deposits, a certificate of statutory auditor of the company shall be attached in Form DPT-1, stating that the company had made good the default and a period of five years has lapsed the date of making good the default as the case may be II. Rule 5: Manner and extent of Deposit Insurance - OMITTED III. Rule 13: Maintenance of Liquid Assets and Creation of Deposit Repayment Reserve Account. IV. Rule 13 proviso shall be SUBSTITUTED as follow. Provided that the amount remaining deposited shall not at any time fall below 20% of the amount of deposits maturing during the financial year V. Rule 14(1)(K): Register of Deposits OMITTED VI. Form DPT-1 SUBSTITUTED by new form VII. Form DPT-3 SUBSTITUTED by new form. B. The Companies (Registration of Charges) Amendment Rules, 2018. These Rules shall come into force from Date of publication in official Gazette. I. Rule 8- Satisfaction of Charge Rule 8(1) shall be SUBSTITUTED, namely. A Company or charge holder shall within a period of 300 days from the date of payment or satisfaction in full or any charge registered under Chapter VI, give intimation of the same to the Registrar in Form No. CHG-4 along with the Fee. II. Rule 12 - Condonation of Delay and Rectification of Register of Charges. Rule 12(1) Where the instrument creating or modifying a charge is not filed within a period of three hundred days from the date of its creation (including acquisition of a property subject to a charge) or modification and where the satisfaction of the charge is not filed within thirty days (Substituted by) Three Hundred Days from the date on which such payment of satisfaction, the Registrar shall not register the same unless the delay is condoned by the Central Government. Food for Thought. A Company satisfied its Charge on 01.01.2018, have to file CHG-4 within 30 days i.e.(31st Jan, 2018) However, Company has not filed the same. Whether such CHG-4 shall fall under amended rules. C. The Companies ((Registration Offices and Fees) Third Amendment Rules, 2018. These Rules shall come into force from 10th July, 2018 I. FEE FOR FILING e- Form DIR-3 KYC under rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Note:For the current financial (2018-2019), no fee shall be chargeable till , the 31^stAugust, 2018 and fee of Rs.5000 shall be payable on or after the 1st September, 2018

Notification date: 07.05.2018

MCA vide notification dated: 07^thMay, 2018 has amended many rules of Companies Act, 2013 to support notified 70 sections of Companies Amendment Act, 2017. In this editorial author shall endeavor to briefly discuss such amended rules.

A. The Companies (Prospectus and Allotment of Securities) Amendment Rules, 2018.

Rules, 2014, the rule 3, rule 4, rule 5 and rule 6 shall beOMITTED.

1. Rule 3:Information to be stated in the prospectus
2. Rule 4: Reports to be set out in the Prospectus
3. Rule 5: Other matters and reports to be stated in the prospectus
4. Rule 6: Period for which information to be provided in certain cases

B. The Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2018.

Rule 5 Qualification of Independent Director shall be numbered as Rule 5 sub rule 1 and following sub- rule 2 following shall beINSERTED:

(2) None of the relatives of an independent director, for the purposes of sub-clauses (ii) and (iii) of clause (d) of sub-section (6) of section 149,-

(i)is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors; or

(ii)has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company,

for an amount of fifty lakhs rupees, at any time during the two immediately preceding financial years or during the current financial year."

C. The Companies (Meetings of Board and its powers) Amendment Rules, 2018.

i. InRule 4,Matters not to be dealt with in a meeting through video conferencing or other audio visual meansthe followingProvisoshall beINSERTED.

"Provided that where there is quorum presence in a meeting through physical presence of directors, any other director may participate through video conferencing or other audio visual means.

ii. InRule 6, Committees of the Board:

For the words every listed company, the words every listed public company shall be substitute

iii.InRule 13,Special Resolutionshall beSUBSTITUED.

A resolution passed at a general meeting in terms of sub-section (3) of Section 186 to give any loan or guarantee or investment or providing any security or the acquisition under sub-section (2) of section 186 shall specify the total amount up to which the Board of directors are authorized to give such loan or guarantee, to provide such security or make such acquisition:

Provided that the company shall disclose to the members in the financial statement the full particulars in accordance with the provisions of sub-section (4) of section 186.

D. The Companies (Audit and Auditors)) Amendment Rules, 2018.

I. In Rule 3 Manner and procedure of selection and appointment of auditors

• [1]explanationshall beOMITTED

[1]Explanation.- For the purposes of this rule, it is hereby clarified that, if the appointment is not ratified by the members of the company, the Board of Directors shall appoint another individual or firm as its auditor or auditors after following the procedure laid down in this behalf under the Act

• [2] Proviso to sub rule 7 shall beOMITTED

[2]Providedthat such appointment shall be subject to ratification in every annual general meeting till the sixth such meeting by way of passing of an ordinary resolution

II. Rule 9 Liability to devolve on concerned partners onlyshall beOMITTED III. In Rule 10A for the words "adequate internal financial controls system", the words "internal financial controls with reference to financial statements" shall beSUBSTITUTED. IV. In Rule 14 Remuneration of the Cost Auditor (a) in clause (a), in sub-clause (i), for the words, "who is a cost accountant in practice", the words "who is a cost accountant" shall be substituted; (b) in clause (b) for the words "who is a cost accountant in practice", the words "who is a cost accountant' shall be substituted. E. The Companies (Share Capital and Debentures) Amendment Rules, 2018. In Rule 5 sub rule 3 Certificate of shares (where shares are not in demat form)shall beSUBSTITUTEDas Follow: "(3) Every certificate shall specify the shares to which it relates and the amount paid-up thereon and shall be signed by two directors or by a director and the company secretary, wherever the company has appointed company secretary Provided that in case the company has a common seal it shall be affixed in the presence of persons required to sign the certificate. Explanation. - For the purposes of this sub-rule, it is hereby clarified that,- (a) in case of an One Person Company, it shall be sufficient if the certificate is signed by a director and the company secretary or any other person authorised by the Board for the purpose. (b) a director shall be deemed to have signed the share certificate if his signature is printed thereon as facsimile signature by means of any machine, equipment or other mechanical means such as engraving in metal or lithography or digitally signed, but not by means of rubber stamp, provided that the director shall be personally responsible for permitting the affixation of his signature thus and the safe custody of any machine, equipment or other material used for the purpose. F. The Companies (Registration offices and Fees) Second Amendment Rules, 2018. In Proviso of Rule 10 sub rule 3 Procedure on receipt of any application or form or document electronicallyshall beSUBSTITUTEDas Follow:"Provided that Registrar shall allow fifteen days, time for re-submission in case of reservation of a name through web service -"RUN for rectifications of defects, if any."

---

(Author CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted [email protected]). Disclaimer:The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION